On 17 April 2014, the European Parliament approved the draft of a directive submitted by the European Commission (Commission) on actions for damages brought under domestic national law for infringements of competition law (Directive). The Directive is aimed at harmonizing national rules governing actions for damages brought by customers or suppliers of undertakings liable for participating in cartels or abuses of dominance. In this respect, the Directive facilitates the granting of compensation to the victims of anticompetitive practices, but in a limited way in order to take account of the requirements associated with the national competition authorities’ (NCAs) policy.
Adopted on 17 April by the European Parliament, the goal of the Directive is to promote the award of damages to clients or suppliers of undertakings liable for participating in cartels or abuses of dominance. For these purposes, it provides for a minimal harmonization of national rules related to civil actions brought by these such. However, although the main objective of the Directive is to facilitate actions for damages, it does not overlook the impact on the effectiveness of enforcement by the NCAs.
It should be noted that the Directive will enter into force after being approved by the Council of the European Union in the coming weeks and must then be implemented by the Member States within a maximum period of two years.
A framework which encourages compensation of the victims of anticompetitive practices
The Directive requires Member States to ensure that all victims – whether direct or indirect purchasers – of an infringement of competition law are able to seek full compensation for the damage suffered. For such purposes, the minimum standards provided are intended to encourage private actions for:
The parties to the action
Regarding plaintiffs, any person, regardless of its level in the distribution chain, may bring an individual action for damages – the class action is not covered by the Directive. Regarding defendants, each of the co-authors of the breach, the liability of which is joint and several, can be subject to an action for damages, except for small and medium enterprises, which can only be liable to their own purchaser.
Quantification of the prejudice and the impact of additional cost
The Directive provides for a rebuttable presumption that a cartel causes harm. Therefore, the right to compensation covers the compensation for the harm and the loss of earnings plus interest. However, the rules related to the passing on defence will probably require some Member States such as France or Germany to change their rules which currently apply. If the plaintiff in the action is the direct victim of the cartel, the burden of proof lies on the defendant to demonstrate that the additional cost has been passed on to the end customers. However, when the plaintiff is the final customer, s/he has to prove that the additional cost has been passed on to him/her.
The facilitated disclosure of evidence
While the Directive provides a black list of documents benefiting from absolute protection and a grey list of documents protected only until the end of the procedure (see below), all other documents are, on reasoned justification, accessible by the plaintiffs in the action.
The evidential effect of final national decisions
The Directive provides two mechanisms in this respect. When a national court
hears an action for damages, the final decision of the NCAs of the same Member State or their jurisdiction of appeal establishes conclusively the infringement of competition law while before the courts of another Member State, such a decision must be presented and constitute at least a prima facie case of infringement. The impact of this provision in French law is significant since currently the national court – except in French class action – is not bound by the decisions of the Competition Authority.
The limitation period
The limitation period provided by the Directive for actions for damage is five years from the date of knowledge of the infringement and the identity of its author and the resulting harm. National laws are supposed to specify that date. This period cannot begin before the infringement has actually ceased and will be suspended by the initiation of proceedings by a NCA and is resumed only after a minimum period of one year following the final decision of the NCA or the termination of its proceedings. The suspension mechanism is currently absent in French liability law – outside the provisions applicable to class actions – this provision will therefore result in significantly lengthening the time period to obtain damages.
However, although the Directive tends to open avenues of redress for victims of anti-competitive practices, it sets up a filter preventing defamatory or abusive actions on the one hand, and avoids making it more difficult to detect and sanction anti-competitive practices by the NCAs, on the other hand.
A protective framework for NCAs’ action
In order to preserve the incentive for undertakings to participate in leniency or settlement procedures, the Directive grants them protection in the context of civil actions by:
The black list: the non-disclosure of statements made to seek clemency and proposed transaction
The spectrum of leniency statements covered by the Directive is wide as it refers to any oral or written statements, or any trace of such statement describing the cartel and the role of the declarant. This guarantee provided by the Directive will however have only little impact in French law since the Commercial Code already protects such documents.
The grey list: disclosure of the documents to the NCAs at the end of the proceedings
This protection applies mainly to (i) any documents prepared by the parties and the NCAs during the procedure (e.g. the statement of objections, the response thereto or an inquiry and its response) and (ii) any proposed settlement discontinued during the procedure.
The presentation of a reasoned justification by the plaintiff to obtain the file of an NCA
The Directive provides that the plaintiff must present factual data and reasonably accessible evidence showing reasonable grounds to presume the existence of harm. In addition, and unlike the French law currently in force, the addressees of an injunction ordering the divulgation of information will have the opportunity to be heard before a national court decides on the matter.
The limitation of liability of an undertaking enjoying immunity from fines against its own customers/suppliers
In the event that a victim is unable to obtain full compensation for the damage from another participant in the cartel, the liability of the undertaking which has obtained immunity can be sought, although its contribution may not exceed its share in the harm caused.
In conclusion, although the Directive, the final version of which is likely to be adopted in similar terms, manages to promote the triggering of private actions while protecting the NCAs’ policy, it will not totally eliminate the current differences between the procedural systems of the Member States. Indeed, the limited impact of the Directive, symbolized by the minimal nature of the commitments which it requires, will not be able to prevent forum shopping regarding compensation for damages arising from anti-competitive practices.